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“Éminence Grise” and “Efficient Manager”: Why Armenia is Getting a New Prime Minister

By Mikael Zolyan

On September 8, 2016, the Hovik Abrahamyan government in Armenia resigned. Former mayor of Yerevan, Karen Karapetyan, who had for the last six years worked in Russia as part of Gazprom’s top management (as First Vice-President of Gazprombank, Deputy Director General for Strategy and Development at Gazrpom Mezhregiongaz, and Deputy Director General for International Projects of Gazrpom Energoholding) will take over the post. Even though Armenia is still a presidential republic, the resignation of the government is fairly significant, especially given the dramatic events of late July. It could be viewed as an attempt to mitigate the public discontent with the authorities, the desire to overcome a possible split within the elites in power, or preparations for the parliamentary elections in April 2017.

In Search of a “National Consensus”

The resignation of the government is largely the result of the events of July, when a police building in the Erebuni district of Yerevan was seized and protests followed. The public reaction to these events demonstrated that the level dissatisfaction with, and mistrust of, the authorities had reached dangerous levels: the actions of the armed groups were not unequivocally condemned; on the contrary, directly or indirectly, a large part of the population supported them. It was perfectly clear that, given such sentiments, new radical protests were only a matter of time, provided, of course, the country does not undergo serious changes.

Besides, the fact that a group of armed radicals could seize a police building with no resistance and hold it for over two weeks signifies a crisis within the Armenian government institutions. A certain split among the elites in power is illustrated by former president Robert Kocharyan, who rather harshly criticized the incumbent president Serzh Sargsyan a few days before the government resigned. If the elites are indeed split, then the example of other post-Soviet states tells us that such a schism is usually coupled with sharp popular discontent with the authorities, which can have disastrous consequences.

In this respect, installing a new government can, on the one hand, diffuse the situation and mitigate public discontent; on the other hand, it could restore the consensus between different groups in power and eliminate the danger of a split within the elites. The idea of forming a “national consensus government” was voiced by Serzh Sargsyan on August 1, immediately after the Erebuni crisis had been resolved. At the same time, he noted that, in his view, “national consensus” would not include those who “supported armed radicals.” Translated into the language of Armenian politics, this means that the consensus will not include the majority of the opposition parties, and the new government will be formed by the ruling Republican Party of Armenia and its allies. In other words, in response to the question posed by the Russian political scientist Sergey Markedonov (“Armenia: National Consensus or Intra-Elite Consolidation?”), the “national consensus government” mostly refers to consensus among the elites. Nevertheless, the task of making the authorities acceptable to the wider public should not be altogether discounted.

In this regard, replacing the “old-timer” Abrahamyan with Karapetyan, a “person from the outside,” is a telling sign. Abrahamyan is one of the ruling Republican Party’s most influential figures; he plays the key role in mobilizing the resources of the authorities during both parliamentary and presidential elections. During the presidencies of Kocharyan and Sargsyan’s presidencies, Abrahamyan had the image of an “éminence grise” of sorts, as he held various key offices from deputy prime minister to the head of the president’s administration, speaker of the National Assembly, and, finally, prime minister. The opposition has long accused Abrahamyan of corruption, which, it should be noted, did not preclude the United States Agency for International Development (USAID) from giving $750,000 to the Anti-Corruption Council headed by Abrahamyan. In June 2015, protests broke out in Yerevan after a hike in electricity rates. Dubbed the “Electricity Maidan” in Russia, these protests showed the extent of the population’s discontent with the socioeconomic situation in Armenia. Given all these factors, the authorities intended Abrahamyan’s resignation to mitigate at least somewhat the popular discontent and to create an impression of positive dynamics.

Karapetyan is a perfect fit for the goals the authorities pursued when they had the prime minister resign. Even though he was nominated by the Republican Party of Armenia, Karapetyan is not formally a member, and this protects him somewhat from the negative sentiment attached to the ruling party in the popular perception. Moreover, Karapetyan, who worked in the top management of Russia’s Gazprom, is dissociated from the unpopular steps taken by the authorities over the past few years and has the image of an effective manager. Whatever the situation may be, it is hard to far to speak about Karapetyan’s popularity, but on the whole, compared to other government figures, he is seen in a relatively positive, or at least neutral, light.

Besides, Karapetyan appears to be an ideal candidate from the point of view of striking a balance between various groups within the political and economic elite. He is acceptable to Sargsyan, and at the same time he is rumored to be close to former president Robert Kocharyan. Karapetyan is a native of Nagorno-Karabakh, yet, unlike Kocharyan and Sargsyan, he has spent most of his life in Yerevan, and he is not as closely associated with the so-called “Karabakh Clan.” Finally, his work in Russia and his image as a pro-Russian politician mean that he will be an acceptable candidate for Moscow. It remains to be seen, though, how Yerevan’s western partners will respond to him, but so far, he has not been embroiled in corruption and human rights scandals, so there is no formal reason for western governments to treat him negatively.

What Next: What Is to Be Expected from Karapetyan’s Government?

The combination of these factors made Karapetyan an ideal candidate for the office of the prime minister. Yet it is hard to say what goals were set for him. The new government will, most likely, work for only half a year, since parliamentary elections are scheduled for April, after which entails a new government will be formed. Thus far, it is difficult to predict whether Karapetyan will act as a “locum tenens,” or whether he will be prime minister in the new government if the Republican Party wins. It is also unclear whether the Republican Party intends to use the new prime minister’s image in the electoral campaign. Yet it is now obvious that given the popular discontent, it would be risky for the ruling party to support its old leaders in the elections.

We should not forget that after the constitutional referendum held in December 2015, the Armenian state system will be transformed, and the new parliament will essentially work within a parliamentary republic. The importance of the Prime Minister will increase accordingly. While Sargsyan will retain office until his term expires in 2018, it is clear that the prime minister in the government formed after the April elections will be considered as his potential political successor. The possibility of this person being Karapetyan should not be discounted. Yet it is too early to discuss, especially as it is still unclear whether Sargsyan is looking for a successor, or whether he intends to retain the leading role after the country transitions to parliamentary rule.

A lot hinges on the reputation that Karapetyan’s government will gain. It will have to deal with grave socioeconomic issues, including a high unemployment rate, growing public debt and imports exceeding exports. What is more, the Armenian people expect the new government to fight corruption and the monopolization of some sectors of the economy by oligarchs, prominent businesspersons with ties to the authorities. Unlike his predecessor, Karapetyan is viewed as a “person from the outside,” and is expected to succeed quickly in revitalizing the economy and in fighting corruption. However, even if Karapetyan is planning to introduce major reforms, he will find it hard to break the resistance of influential groups of officials and large businesses interested in preserving the status quo. It is therefore possible that Karapetyan will attempt to achieve quick and obvious successes by attracting investments, in particular, from Russia, and he will be aided by his experience with Gazprom and his connections within the Russian business elite.

As regards foreign policy, no major changes should be expected in this area. Firstly, in Armenia, at least until the amendments to the constitution enter into force, foreign policy is the president’s domain, and the presidential administration will play the greater role in shaping it. Secondly, due to geopolitical realities, any Armenian government will strive to preserve a certain balance between relations with Russia on the one hand and with the West on the other. During Kocharyan’s presidency, this policy was termed “complementarism.” Yerevan has been conducting this policy for a while, and it should not be expected to abandon it.

Nonetheless, Karapetyan’s appointment can be viewed as a sort of a nod to Moscow, especially given the tensions in Russia–Armenia relations after the “four-day war.” During that incident, Yerevan expected Russia to provide at least political and psychological support in the conflict with Azerbaijan, even if would not intervene by bringing in its troops, while Moscow preferred to keep its role of an intermediary in the Nagorno-Karabakh conflict. This led to a certain cooling of relations between Moscow and Yerevan. In this regard, the appointment of Karapetyan, with his Moscow connections, can be viewed as a step intended to re-set the allied relations between Yerevan and Moscow. In any case, regardless of the changing office holders, Armenia will most likely strive to preserve and strengthen its allied relations with Moscow, while not abandoning cooperation with the West, primarily with the European Union and, to a lesser degree, with NATO.

In any case, Karapetyan is stepping into the post of Prime Minister of Armenia at a difficult time. On the one hand, the tasks he faces are extremely complex. On the other, dissatisfaction with the polices of the previous government is so high that, against this background, the Armenian people would enthusiastically welcome even moderate successes. The principal task facing Karapetyan’s government is to reverse the trend of alienating the authorities from the public and the radicalization of protests, which resulted in the July events. He does not have much time in which to handle this task, as parliamentary elections are scheduled for April. If Karapetyan’s government fails to achieve obvious successes over these six months, serious upheavals may take place in Armenia.